Intrinsic value of Wal-Mart Stores - WMT

Previous Close

$104.59

  Intrinsic Value

$78.70

stock screener

  Rating & Target

sell

-25%

Previous close

$104.59

 
Intrinsic value

$78.70

 
Up/down potential

-25%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WMT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.78
  4.20
  4.28
  4.35
  4.42
  4.48
  4.53
  4.57
  4.62
  4.66
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.84
  4.85
  4.87
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
  4.96
  4.96
Revenue, $m
  485,873
  506,280
  527,948
  550,925
  575,258
  601,001
  628,212
  656,952
  687,286
  719,284
  753,018
  788,569
  826,018
  865,452
  906,965
  950,653
  996,620
  1,044,974
  1,095,828
  1,149,304
  1,205,527
  1,264,631
  1,326,755
  1,392,048
  1,460,663
  1,532,764
  1,608,522
  1,688,117
  1,771,737
  1,859,582
  1,951,861
Variable operating expenses, $m
 
  480,894
  501,403
  523,150
  546,182
  570,548
  596,303
  623,505
  652,216
  682,501
  714,431
  746,375
  781,820
  819,145
  858,436
  899,787
  943,294
  989,061
  1,037,194
  1,087,809
  1,141,023
  1,196,965
  1,255,765
  1,317,564
  1,382,508
  1,450,751
  1,522,456
  1,597,792
  1,676,938
  1,760,083
  1,847,424
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  463,109
  480,894
  501,403
  523,150
  546,182
  570,548
  596,303
  623,505
  652,216
  682,501
  714,431
  746,375
  781,820
  819,145
  858,436
  899,787
  943,294
  989,061
  1,037,194
  1,087,809
  1,141,023
  1,196,965
  1,255,765
  1,317,564
  1,382,508
  1,450,751
  1,522,456
  1,597,792
  1,676,938
  1,760,083
  1,847,424
Operating income, $m
  22,764
  25,386
  26,545
  27,774
  29,076
  30,454
  31,910
  33,447
  35,071
  36,783
  38,588
  42,194
  44,197
  46,307
  48,528
  50,866
  53,326
  55,913
  58,634
  61,495
  64,503
  67,666
  70,990
  74,484
  78,155
  82,013
  86,066
  90,325
  94,799
  99,500
  104,437
EBITDA, $m
  32,844
  36,249
  37,800
  39,445
  41,187
  43,031
  44,979
  47,037
  49,208
  51,499
  53,915
  56,460
  59,141
  61,965
  64,937
  68,065
  71,356
  74,818
  78,459
  82,288
  86,313
  90,545
  94,993
  99,668
  104,581
  109,743
  115,167
  120,866
  126,853
  133,143
  139,749
Interest expense (income), $m
  2,351
  2,059
  2,297
  2,553
  2,824
  3,111
  3,415
  3,736
  4,075
  4,433
  4,811
  5,209
  5,629
  6,071
  6,537
  7,027
  7,542
  8,085
  8,656
  9,256
  9,887
  10,551
  11,249
  11,982
  12,753
  13,563
  14,414
  15,308
  16,247
  17,235
  18,272
Earnings before tax, $m
  20,497
  23,327
  24,248
  25,222
  26,252
  27,343
  28,495
  29,711
  30,995
  32,349
  33,776
  36,984
  38,568
  40,236
  41,992
  43,839
  45,783
  47,828
  49,978
  52,239
  54,616
  57,115
  59,741
  62,502
  65,402
  68,450
  71,653
  75,017
  78,552
  82,265
  86,166
Tax expense, $m
  6,204
  6,298
  6,547
  6,810
  7,088
  7,383
  7,694
  8,022
  8,369
  8,734
  9,120
  9,986
  10,413
  10,864
  11,338
  11,837
  12,361
  12,914
  13,494
  14,105
  14,746
  15,421
  16,130
  16,875
  17,659
  18,482
  19,346
  20,255
  21,209
  22,212
  23,265
Net income, $m
  13,643
  17,028
  17,701
  18,412
  19,164
  19,960
  20,801
  21,689
  22,626
  23,615
  24,657
  26,998
  28,155
  29,372
  30,654
  32,003
  33,422
  34,914
  36,484
  38,135
  39,870
  41,694
  43,611
  45,626
  47,744
  49,969
  52,306
  54,763
  57,343
  60,054
  62,901

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,602
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  198,825
  200,269
  208,840
  217,929
  227,555
  237,738
  248,502
  259,870
  271,870
  284,527
  297,871
  311,934
  326,747
  342,347
  358,768
  376,050
  394,233
  413,360
  433,476
  454,630
  476,870
  500,249
  524,824
  550,652
  577,794
  606,315
  636,282
  667,768
  700,845
  735,594
  772,097
Adjusted assets (=assets-cash), $m
  192,223
  200,269
  208,840
  217,929
  227,555
  237,738
  248,502
  259,870
  271,870
  284,527
  297,871
  311,934
  326,747
  342,347
  358,768
  376,050
  394,233
  413,360
  433,476
  454,630
  476,870
  500,249
  524,824
  550,652
  577,794
  606,315
  636,282
  667,768
  700,845
  735,594
  772,097
Revenue / Adjusted assets
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
  2.528
Average production assets, $m
  115,347
  119,988
  125,124
  130,569
  136,336
  142,437
  148,886
  155,698
  162,887
  170,470
  178,465
  186,891
  195,766
  205,112
  214,951
  225,305
  236,199
  247,659
  259,711
  272,385
  285,710
  299,717
  314,441
  329,915
  346,177
  363,265
  381,220
  400,084
  419,902
  440,721
  462,591
Working capital, $m
  -9,239
  -12,657
  -13,199
  -13,773
  -14,381
  -15,025
  -15,705
  -16,424
  -17,182
  -17,982
  -18,825
  -19,714
  -20,650
  -21,636
  -22,674
  -23,766
  -24,916
  -26,124
  -27,396
  -28,733
  -30,138
  -31,616
  -33,169
  -34,801
  -36,517
  -38,319
  -40,213
  -42,203
  -44,293
  -46,490
  -48,797
Total debt, $m
  45,938
  46,875
  52,095
  57,630
  63,492
  69,693
  76,249
  83,172
  90,480
  98,188
  106,315
  114,879
  123,900
  133,400
  143,401
  153,925
  164,999
  176,647
  188,898
  201,780
  215,325
  229,563
  244,529
  260,258
  276,788
  294,157
  312,407
  331,582
  351,726
  372,888
  395,118
Total liabilities, $m
  121,027
  121,964
  127,184
  132,719
  138,581
  144,782
  151,338
  158,261
  165,569
  173,277
  181,404
  189,968
  198,989
  208,489
  218,490
  229,014
  240,088
  251,736
  263,987
  276,869
  290,414
  304,652
  319,618
  335,347
  351,877
  369,246
  387,496
  406,671
  426,815
  447,977
  470,207
Total equity, $m
  77,798
  78,305
  81,657
  85,210
  88,974
  92,956
  97,164
  101,609
  106,301
  111,250
  116,468
  121,966
  127,758
  133,858
  140,278
  147,035
  154,145
  161,624
  169,489
  177,760
  186,456
  195,598
  205,206
  215,305
  225,917
  237,069
  248,786
  261,097
  274,031
  287,617
  301,890
Total liabilities and equity, $m
  198,825
  200,269
  208,841
  217,929
  227,555
  237,738
  248,502
  259,870
  271,870
  284,527
  297,872
  311,934
  326,747
  342,347
  358,768
  376,049
  394,233
  413,360
  433,476
  454,629
  476,870
  500,250
  524,824
  550,652
  577,794
  606,315
  636,282
  667,768
  700,846
  735,594
  772,097
Debt-to-equity ratio
  0.590
  0.600
  0.640
  0.680
  0.710
  0.750
  0.780
  0.820
  0.850
  0.880
  0.910
  0.940
  0.970
  1.000
  1.020
  1.050
  1.070
  1.090
  1.110
  1.140
  1.150
  1.170
  1.190
  1.210
  1.230
  1.240
  1.260
  1.270
  1.280
  1.300
  1.310
Adjusted equity ratio
  0.376
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391
  0.391

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13,643
  17,028
  17,701
  18,412
  19,164
  19,960
  20,801
  21,689
  22,626
  23,615
  24,657
  26,998
  28,155
  29,372
  30,654
  32,003
  33,422
  34,914
  36,484
  38,135
  39,870
  41,694
  43,611
  45,626
  47,744
  49,969
  52,306
  54,763
  57,343
  60,054
  62,901
Depreciation, amort., depletion, $m
  10,080
  10,863
  11,255
  11,671
  12,111
  12,577
  13,069
  13,589
  14,138
  14,717
  15,327
  14,266
  14,944
  15,657
  16,408
  17,199
  18,030
  18,905
  19,825
  20,793
  21,810
  22,879
  24,003
  25,184
  26,426
  27,730
  29,101
  30,541
  32,054
  33,643
  35,312
Funds from operations, $m
  37,720
  27,892
  28,956
  30,083
  31,275
  32,537
  33,870
  35,278
  36,764
  38,332
  39,984
  41,265
  43,099
  45,030
  47,063
  49,202
  51,452
  53,820
  56,309
  58,927
  61,680
  64,573
  67,614
  70,811
  74,169
  77,699
  81,407
  85,303
  89,396
  93,696
  98,213
Change in working capital, $m
  6,190
  -510
  -542
  -574
  -608
  -644
  -680
  -718
  -758
  -800
  -843
  -889
  -936
  -986
  -1,038
  -1,092
  -1,149
  -1,209
  -1,271
  -1,337
  -1,406
  -1,478
  -1,553
  -1,632
  -1,715
  -1,803
  -1,894
  -1,990
  -2,091
  -2,196
  -2,307
Cash from operations, $m
  31,530
  28,402
  29,498
  30,657
  31,884
  33,181
  34,551
  35,997
  37,523
  39,131
  40,827
  42,154
  44,035
  46,016
  48,100
  50,294
  52,601
  55,028
  57,581
  60,264
  63,085
  66,051
  69,167
  72,443
  75,885
  79,501
  83,301
  87,293
  91,487
  95,892
  100,520
Maintenance CAPEX, $m
  0
  -8,805
  -9,159
  -9,551
  -9,967
  -10,407
  -10,873
  -11,365
  -11,885
  -12,434
  -13,013
  -13,623
  -14,266
  -14,944
  -15,657
  -16,408
  -17,199
  -18,030
  -18,905
  -19,825
  -20,793
  -21,810
  -22,879
  -24,003
  -25,184
  -26,426
  -27,730
  -29,101
  -30,541
  -32,054
  -33,643
New CAPEX, $m
  -10,619
  -4,641
  -5,135
  -5,445
  -5,767
  -6,101
  -6,449
  -6,811
  -7,189
  -7,583
  -7,995
  -8,425
  -8,875
  -9,346
  -9,839
  -10,354
  -10,894
  -11,460
  -12,053
  -12,674
  -13,325
  -14,008
  -14,724
  -15,474
  -16,262
  -17,088
  -17,955
  -18,864
  -19,818
  -20,819
  -21,870
Cash from investing activities, $m
  -13,987
  -13,446
  -14,294
  -14,996
  -15,734
  -16,508
  -17,322
  -18,176
  -19,074
  -20,017
  -21,008
  -22,048
  -23,141
  -24,290
  -25,496
  -26,762
  -28,093
  -29,490
  -30,958
  -32,499
  -34,118
  -35,818
  -37,603
  -39,477
  -41,446
  -43,514
  -45,685
  -47,965
  -50,359
  -52,873
  -55,513
Free cash flow, $m
  17,543
  14,955
  15,203
  15,660
  16,150
  16,672
  17,228
  17,820
  18,448
  19,114
  19,819
  20,105
  20,893
  21,726
  22,604
  23,531
  24,508
  25,538
  26,623
  27,765
  28,968
  30,233
  31,565
  32,965
  34,439
  35,988
  37,616
  39,329
  41,128
  43,020
  45,007
Issuance/(repayment) of debt, $m
  -3,591
  4,857
  5,220
  5,535
  5,862
  6,202
  6,555
  6,923
  7,307
  7,708
  8,127
  8,564
  9,021
  9,500
  10,000
  10,525
  11,073
  11,648
  12,251
  12,882
  13,544
  14,238
  14,966
  15,729
  16,530
  17,369
  18,250
  19,175
  20,144
  21,162
  22,230
Issuance/(repurchase) of shares, $m
  -8,298
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -12,713
  4,857
  5,220
  5,535
  5,862
  6,202
  6,555
  6,923
  7,307
  7,708
  8,127
  8,564
  9,021
  9,500
  10,000
  10,525
  11,073
  11,648
  12,251
  12,882
  13,544
  14,238
  14,966
  15,729
  16,530
  17,369
  18,250
  19,175
  20,144
  21,162
  22,230
Total cash flow (excl. dividends), $m
  4,378
  19,812
  20,423
  21,195
  22,012
  22,874
  23,784
  24,744
  25,756
  26,822
  27,946
  28,669
  29,915
  31,226
  32,605
  34,056
  35,582
  37,187
  38,874
  40,648
  42,512
  44,471
  46,531
  48,695
  50,968
  53,357
  55,867
  58,503
  61,273
  64,182
  67,237
Retained Cash Flow (-), $m
  2,748
  -3,189
  -3,351
  -3,554
  -3,764
  -3,982
  -4,209
  -4,445
  -4,692
  -4,949
  -5,218
  -5,499
  -5,792
  -6,099
  -6,421
  -6,757
  -7,110
  -7,479
  -7,866
  -8,271
  -8,696
  -9,141
  -9,609
  -10,099
  -10,613
  -11,152
  -11,717
  -12,311
  -12,933
  -13,587
  -14,272
Prev. year cash balance distribution, $m
 
  2,682
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  19,305
  17,072
  17,642
  18,248
  18,892
  19,575
  20,298
  21,064
  21,873
  22,728
  23,171
  24,123
  25,126
  26,184
  27,299
  28,472
  29,708
  31,008
  32,377
  33,816
  35,330
  36,922
  38,596
  40,356
  42,205
  44,149
  46,192
  48,339
  50,595
  52,965
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  18,491
  15,597
  15,305
  14,959
  14,559
  14,104
  13,592
  13,027
  12,409
  11,744
  10,821
  10,099
  9,349
  8,579
  7,798
  7,018
  6,249
  5,500
  4,783
  4,106
  3,476
  2,901
  2,383
  1,926
  1,530
  1,193
  912
  684
  501
  359
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company operates through three segments: Walmart U.S., Walmart International and Sam's Club. The Walmart U.S. segment includes its mass merchant concept in the United States operating under the Walmart or Wal-Mart brands, as well as digital retail. The Walmart International segment consists of the Company's operations outside of the United States, including various retail Websites. The Walmart International segment includes various formats divided into three categories: retail, wholesale and other. These categories consist of various formats, including supercenters, supermarkets, and warehouse clubs, such as Sam's Clubs, cash and carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The Sam's Club segment includes the warehouse membership clubs in the United States, and samsclub.com.

FINANCIAL RATIOS  of  Wal-Mart Stores (WMT)

Valuation Ratios
P/E Ratio 23.4
Price to Sales 0.7
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 10.1
Price to Free Cash Flow 15.2
Growth Rates
Sales Growth Rate 0.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.5%
Cap. Spend. - 3 Yr. Gr. Rate -4.1%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 54%
Total Debt to Equity 59%
Interest Coverage 10
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 11.4%
Return On Equity 17.2%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 2.4
Profitability Ratios
Gross Margin 25.6%
Gross Margin - 3 Yr. Avg. 25.2%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 7.1%
Operating Margin 4.7%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 4.6%
Net Profit Margin 2.8%
Net Profit Margin - 3 Yr. Avg. 3.1%
Effective Tax Rate 30.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.9%
Payout Ratio 45.6%

WMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WMT stock intrinsic value calculation we used $485873 million for the last fiscal year's total revenue generated by Wal-Mart Stores. The default revenue input number comes from 2017 income statement of Wal-Mart Stores. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WMT stock valuation model: a) initial revenue growth rate of 4.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for WMT is calculated based on our internal credit rating of Wal-Mart Stores, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Wal-Mart Stores.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WMT stock the variable cost ratio is equal to 95%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WMT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Wal-Mart Stores.

Corporate tax rate of 27% is the nominal tax rate for Wal-Mart Stores. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WMT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WMT are equal to 23.7%.

Life of production assets of 13.1 years is the average useful life of capital assets used in Wal-Mart Stores operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WMT is equal to -2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $77798 million for Wal-Mart Stores - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2981.87 million for Wal-Mart Stores is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Wal-Mart Stores at the current share price and the inputted number of shares is $311.9 billion.

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Financial statements of WMT
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